ESI Contribution Confusion: How to Handle Salary Hikes Mid-Period?

Dear Sir,

I have one doubt regarding ESI contribution. One employee's salary is 9500 in January, and in March, his salary is hiked to 11000. In that case, what should be done?

Thanks,
ANNA

Hi Anna,

As per my knowledge, the ESI contribution of the employer is 4.75% and the employee contribution is 1.75% up to Rs. 10,000. So, in January, he is eligible for ESI contribution. However, if he received a hike in March, he is not covered under ESI. Please let us know our friends' views on this.

Thanking you,

Yours,
Sree

Dear Sri & Anna,

It is not like that. There are contribution periods and a beneficial period in ESI. So if someone is eligible for ESI, he/she should pay the ESI contribution, even if he/she received a hike in the contribution period up to the completion of the same.

For example, if A's salary is 7500 in the month of February and he gets a hike to 12500 in the month of March. Though he is not eligible for the ESI, he is supposed to pay for the whole contribution period as the ceiling is 10000.

This is correct to my knowledge. Let us see others' views as well.

ESI contribution period is from April to September and October to March. If an employee's salary is revised during the contribution period, they must continue with the same contribution rate until the contribution period completes.

In your case, the employee and employer need to continue the ESI contribution until the end of March.

Regards,
Snjv.nair